Project risk management plan

Since all projects involve some degree of risk, a project risk management plan is necessary to define and document those procedures that will be used to manage risk throughout the life of the project. Risk can be understood as any factor that may potentially interfere with successful completion of the project. Therefore, it follows that by recognizing potential problems the project manager and core team members can avoid most, if not all, of these problems through proper actions.

The procedure used to manage risks is defined in the planning stage, documented in the project risk management plan, and then executed through the life of the project. Risk Management is the process of thinking systematically about all potential undesirable outcomes before they happen and determining procedures that will avoid them, minimize their impact, or cope with their impact.

There are four stages to risk management planning:

1. Risk Identification;
2. Risk Quantification;
3. Risk Response;
4. Risk Monitoring and Control Assessment.

A project risk management plan should also specify who is responsible for managing the different areas of risk, how risks will be tracked through the project life cycle, how contingency plans will be implemented, and how project reserves will be allocated in order to handle risks.

Project size has an effect on the project risk management plan. Large projects normally require more detailed risk planning than smaller projects due to the bigger number and complexity of potential risks. Quite often, this requires developing and analyzing alternative strategies and strategy evaluation criteria.

As a final note, a project risk management plan helps you increase your chances of success as project manager by assessing risk occurrence and defining clear strategies, techniques, and control mechanisms to deal with risk.